This paper investigates the change in industrial structure in Korea, China and Japan in the 2000s by using the product space model. As Korea, China and Japan are key competitors in global markets while closely related to each other through the regional value chain, we expect the comparison in changes in the industrial structure of the three countries will help identify the characteristics of the Korean industrial structure and provide implications for the enhancement of Korea’s industrial structure.
   The main results of the analysis of the change in comparative advantage of Korea, China and Japan in the 2000s are as follows. First, the similarity of the three countries’ comparative advantage has increased. In 2017, the industries which the three countries commonly have strong competitiveness were general machinery, electrical and electronic, and steel and metal. Secondly, with common comparative the number of comparative advantage products in Korea decreased. During the same period, the number of comparative advantage products in China surged and exceeded the level of Japan, in some industries, while that of Japan’s maintained.
   The results of comparative analysis of industrial structure changes of Korea, China, and Japan in product space in the 2000s are as follows. First, all three countries strengthened its competitiveness in products located at the center of the product space. This result implies that all three countries have achieved the structural transformation in manufacturing industries along with the global trend of export sophistication. Secondly, all three countries have strengthened their competitiveness in products, which requires higher level of capacity. Among the three countries, China in particular showed rapid achievement while the country also maintained its competitiveness in products with lower level of capacity. Korea also strengthened its competitiveness in products with higher level of capacity while losing competitiveness in lower level capacity products. Thirdly, focusing the analysis on products with high level of capacity located in the center of the product space, the number of comparative advantage products in all three countries increased. This reflects the fact that Korea’s industrial structure has become more reliant on higher-level capacity products. Fourthly, China’s rapid achievement in structural transformation, however, seems to have been dependent on lower level of quality products compared to Japan and Korea’s.
   The followings are the policy suggestions drawn from the result of this paper. First, support policies for industrial sophistication are expected to be effective if they are implemented together with the support policies for current key industries. Second, creating business infrastructure by removing regulatory barriers could be an important political measure since the industrial structure in Korea has been shifted to produce more central and higher-level capacity products. Third, continuous efforts from both the government and the private sector are necessary for the improvement in product quality while China has achieved quantitative enhancement in terms of the number of comparative advantage products.